Titan Mining Corporation has 9 million shares of common stock outstanding,, 0.5 million shares of preferred stock outstanding,, and 120,000 8.5%% semiannual bonds outsanding,, par value of $11,000 each.. The common stock currently sells for $334 per share and has a beta of 1.20.. The preferred stock currently sells for $883 per share and has a dividend of $77.. Bonds have 15 years to maturity and sell for 93%% of par.. The market risk premium is 10%%,, T - bills are yielding 5%%,, and Titan Mining’s interest rate is 35%%..
a. What is the firm’s market value capital structure?
b. If Titan is evaluating a new investment project that has the same risk as the firm’s typical project,, what rate should the firm use to discount the project’s cash flows?